2007 – Breakthrough year for Cancer Vaccines?

Therapeutic vaccines can transform medical care

Rod Raynovich 2/5/07

Over the past few years there has been a surging of interest in vaccines. Market growth rates are forecasted at 20%/year over the next five years as new products hit the market for HPV(Human Papilloma virus), influenza, rotavirus, shingles and meningitis. R&D investment is growing with a number of “bioterrorism” projects funded by the NIH, and a broad range of vaccines funded by the Bill and Melinda Gates Foundation. The Worldwide prophylactic vaccine market is expected to reach $15 billion in 2010, up from $10B in 2005 (Kalorama Information, Novartis and others).

However Active immunotherapy has proven to be a difficult development area with a significant number of clinical trial failures primarily for melanoma and pancreatic cancers, but 2007 could be a pivotal year bringing new technologies and positive clinical developments for therapeutic cancer vaccine products.

Current cancer drugs on the market have serious side effects so there is a need for better treatment solutions such as immunotherapy that may have advantages over surgery, radiation or chemotherapy.

New technologies that have recently been developed include DNA and cellular delivery, TLR receptor agonists, and adjuvants. A recent report published by Kalorama Information,”The Emerging Cancer Vaccine Market”, forecasts a potential market of $700 million by 2008 and $8.4 billion by 2012 initially driven by Merck’s Gardisil. We review five well funded public companies with proprietary technology that have late stage trials utilizing active immunotherapy also with combination therapy, to complement antibody and chemotherapy for cancer treatment.

Cell Genesys (CEGE)

Cell Genesys develops cell -based immunotherapies and oncolytic virus based therapies to treat various types of cancer. GVAX products are comprised of tumor cells that have been modified to secret GM-CSF, an immune stimulatory hormone. The GVAX immunotherapy has a favorable side effect profile in over 600 patients.

Its GVAX cancer immunotherapies include a Phase 3 product for Prostate Cancer, a Phase 2 product for resectable Pancreatic cancer and acute myelogenous leukemia and a Phase 2 product for for treatment of chronic myelogenous leukemia. CEGE has a strategic alliance with Novartis to develop oncolytic virus therapies and includes a Phase 1 program for bladder cancer.
On January 22 the Company announced follow-up data from its Phase 2 clinical trial of GVAX immunotherapy for pancreatic cancer in 60 patients with operable pancreatic cancer after surgical resection of their tumor and adjuvant radiation and chemotherapy. The updated results show a median survival of 26.8 months. The median survival rate for surgery and adjuvant alone was 17 to 22 months.

In May 2006 the FDA granted Fast Track designation for GVAX immunotherapy for prostate cancer. The Vital 1 Phase 3 trial commenced in 2004 and the Vital 2 trial commenced in 2005 and enrollment should be complete by mid-2007. Results from these trails are not expected until 2009 and Richard Smith Ph.D. an analyst with JPMorgan expects launch of GVAX in the 2010 time frame.

Needham&Co. also covers the stock with a buy rating.

Coley (COLY)

Coley is a biopharmaceutical Company focused on discovery and and development of a novel class of drugs for cancers, infectious diseases, and respiratory disorders. The Company develops proprietary toll-like receptor (TLR) therapeutics, a new class of drugs that direct the immune system to fight diseases. TLR’s are short DNA-like molecules that possess immunomodulatory properties which direct different immune system functions such as a Th 1 and Th 2 response. A new cancer drug CPG7909/PF-3512676 has entered Phase III trials for advanced non-small cell lung cancer (NSCLC). Recently the Company suspended drug development of Actilon, its product candidate for Hepatitus C virus infection so that its TLR agonists and antagonists will be more focused on cancer where it is partnered with Pfizer for both NSCLC and breast cancer. In the Phase II study the CPG7909 product showed anti-tumor activity in cutaneous t-cell lymphoma, melanoma and renal cell carcinoma.The drug was well tolerated and offered survival benefit over chemotherapy alone. Vaximmune is a TLR 9 agonist product that is designed to enhance antibody levels and and killer T cell immune response. Vaximmune as an adjuvant can be used to boost the body’s immune response in cancer and infectious diseases. The Vaximmune product has been licensed to GSK(GlaxoSmithKline) with four clinical studies underway and Novartis.

Coley also has collaborations with Sanofi-Aventis for TLR therapeutics in the respiratory field and a Phase I study has been completed.

In addition to the TLR 9 agonist the Company believes that certain RNA molecules are agonists for TLR 7 and TLR 8 which could be a next generation class of compounds for treating infectious disease.
JPMorgan has an overweight rating on the stock.

Dendreon (DNDN)

Dendreon develops therapeutic products that harness the immune system to treat a range of cancers. A cancer -related target protein is selected and then used to stimulate a patient’s own dendritic cells and reinfused into the patient to stimulate an immune response.The Company’s primary product candidate , Provenge (sipuleucel-T) is an investigative active cellular immunotherapy for the treatment of metastatic, androgen-independent prostate cancer that recently completed Phase III trials. Recently the FDA has assigned priority review status to the Company’s BLA which is expected by May 15, 2007 but maybe as early as March 29.

The BLA submission is based primarily on an improvement in overall survival observed in the recently completed Phase 3 study published in the July issue of the Journal of Clinical Oncology. Dendreon also completed Phase I clinical trials for Neuvenge (lapuleucel-T) an investigative active cellular immunotherapy for the treatment of breast, ovarian, and colon cancers and Phase II should be initiated in 2007. The Company has collaborative agreements with Genentech for the development of products derived from trp-p8, an ion channel found in prostate cancer cells; and with Abgenix for the development of monoclonal antibodies against membrane bound serine protease implicated in solid tumors.

JMP Securities and Needham have a buy rating on the stock.

Dynavax (DVAX)

Dynavax has a broad portfolio of immunotherapeutic products in development to treat allergy, infectious disease and cancer. Analogous to the Coley platform, it also utilizes immunostimulatory sequences (ISS ) or TLR 9 agonists which act upon dendritic cells to reprogram the immune system to fight disease. Although the major focus of the Company is its Phase III ragweed allergy immunotherapeutic and a Phase III Hepatitis B vaccine it also has cancer therapy programs for NHL(Non Hodgkins Lymphoma and Colon cancer. The ISS technology is in a Phase II trial for NHL with Rituximab and the primary objective is to assess the proportion of patients who are alive without disease progression after one year of initiating therapy. In December 2006 the Company initiated a Phase I trial of its TLR 9 agonist in combination with a standard chemotherapy regimen for metastatic colon cancer. If successful a Phase II study will be initiated later in 2007. Zack’s Equity Research has a buy rating on the stock.

Vical (VICL)

Vical is a long term major player in the imunotherapeutics area with DNA delivery technologies for infectious diseases and cancer where the expressed protein is an immune system stimulant. Allovectin is a plasmid/lipid complex containing DNA sequences encoding the MHC-I antigen which is injected directly in tumor lesions designed to stimulate an immune response against the tumor. The Company’s Allovectin-7 cancer immunotherapeutic recently commenced a Phase III pivotal trial as first line therapy in chemotherapy -naive patients with recurrent Stage III or IV metastatic melanoma. The Phase II trial demonstrated promising efficacy for Allovectin-7.

Vical is also partnered with Merck with a HER-2 and CEA antigen in a Phase I trials for breast, colorectal, ovarian or non-small cell lung cancer.

Rodman & Renshaw has coverage of the stock with an outperform/speculative rating.

Another company that has active products in clinical development for cancer is privately held Endocyte, which has a receptor based technology that targets tumor cells using vitamin folate delivery without damaging normal cells. Endocyte has an expanding pipeline in Cancer with two clinical programs: EC17 for metastatic and renal cancer and EC145 for Folate receptor positive cancers. Bristol Myers Squibb has licensed the folate targeting technology for a future cancer clinical development program.
Two other public companies with cancer vaccines in clinical development are Geron (GERN) with its telomerase platform and Favrille (FVRL) with Favid, a B-cell NHL immunotherapy in Phase III.

A September 2006 report by Cole Werble (Windhover Information), “Vaccines Enter the New Age of Adjuvants” expects adjuvant-enhanced products will revolutionize the vaccine field including some of the above emerging companies working on immunostimulants. GlaxoSmithKline has a major investment in MPL, a detoxified bacterial lipopolysaccharide combined with QS21(from Antigenics-AGEN) in a compound called AS04. This adjuvant is expected to be in the Glaxo HPV product Cervarix that is expected in a year or so. Adjuvants can also confer a proprietary position when formulated with vaccines as they offer product differentiation because of their unique chemical structure and immune system activity.
For detailed scientific and clinical background see: Cancer Vaccine Fact Sheet.